Are fancy colleges worth it?
Stacy Dale and Alan Krueger recently estimated “the monetary return to attending a highly selective college.” So what’s the payoff? Well, nothing much, at least as far as money is concerned. According to Dale and Krueger’s paper:
We find that the return to college selectivity is sizeable for both cohorts in regression models that control for variables commonly observed by researchers, such as student high school GPA and SAT scores. However, when we adjust for unobserved student ability by controlling for the average SAT score of the colleges that students applied to, our estimates of the return to college selectivity fall substantially and are generally indistinguishable from zero.
As the Wall Street Journal put it “talented high-school students don’t increase their earning potential by choosing an elite, expensive college over a slightly less elite and expensive alternative.”
It’s probably the wrong question to try to answer, however. These aren’t vocational schools. No one ever argued that going to these schools as an undergraduate would result in some direct earnings payout or a “return on investment,” as if a Dartmouth education were the equivalent of a blue-chip stock.
This should come as a surprise to no one. Talented people go to exclusive colleges; these people would be equally talented if they went to other schools, and probably about as successful.